Special needs planning is a specialized area of the law that focuses on protecting public benefits for people with special needs, while at the same time facilitating a higher quality of life. A special needs plan can provide a framework for proper medical care and management of assets, as well as protect assets from creditors and predators. One of the key components of any special needs plan is a Special Needs Trust.

Where there are a number of different types of Special Needs Trusts available, in California, the two most common in are First Party Trusts and Third Party Trusts.

First Party Special Needs Trusts must be set up by a parent, grandparent, legal guardian, or the Court for the sole benefit of a person with special needs. The Trust must be established with money owned by the person with a disability. First Party Special Needs Trusts are subject to the payback provision, which means that when the beneficiary dies, the trustee must use any remaining trust assets to repay the state of California for all benefits provided by the state to the special needs beneficiary.

Third Party Special Needs Trusts are funded with assets of someone other than the beneficiary. They are the most common and effective way for parents to provide for a child with a disability, and they are not subject to the payback provision. Typically, Third Party Trusts are established through a Revocable Living Trust or as a Stand-Alone Trust. It can also be established through a Will. Benefits of a Third Party Trust include:

No requirement that the state of California be paid back
Trust provisions can be flexible and drafted in accordance with your wishes and desires for the beneficiary, within the guidelines allowed by law
Trustees and successors know what to expect and can prepare/train accordingly
If laws change, the trust can be amended
Ensures that trust assets stay in the family
Can include special provisions such as a Care Manager, specific types of distributions and authorization for the trust to be terminated if the beneficiary is no longer disabled or in need of government benefits

Improved quality of life

A Special Needs Trust gives the beneficiary indirect access to a fund that can provide for his or her supplemental needs. This can dramatically improve the beneficiary’s quality of life, by providing for:

Housing (although this may cause a reduction in benefits)
Food (distributions for food may also cause a reduction in benefits)
Clothing
Household furnishings
Utilities
Educational expenses
Insurance
Musical instruments
Medical procedures or therapies not available through government assistance
Medications (not covered by benefits)
Supplemental nursing home care and private companion services
Geriatric care services
Travel expenses
Entertainment expenses such as movies, concerts or electronic equipment
An automobile
Attorney fees
Other expenses, services or products not provided by a government assistance program

Additional benefits of a Special Needs Trust include:
Freedom of choice

The beneficiary can use his or her Medi-Cal benefits and trust distributions to pay for medical services not provided by Medi-Cal, or for a specialist who does not accept Medi-Cal payments.
Avoiding Conservatorship

In addition to preserving eligibility for government assistance, a Special Needs Trust can save the beneficiary from paying for the ongoing costs and formalities of maintaining a court-supervised conservatorship.

Settlement Planning

A settlement or judgment received by a person with a disability or a minor requires special planning. If the person with a disability receives a settlement, it could cause that person to lose certain essential public benefits. Often, the award will be exhausted quickly to pay for medical expenses that otherwise would have been paid by Medi-Cal. The person would then have no other means of support. The solution to this dilemma is to create a custom plan that takes into account the Plaintiff’s unique needs to achieve their post-settlement goals

First Party Special Needs Trusts (aka (d)(4)(A) SNT or Pooled SNT)

A plaintiff who is disabled and receiving needs-based public benefits requires special planning when he or she receives a settlement or judgment. Failing to plan can lead to great hardship for the client and may lead to a malpractice claim against the plaintiff ’s attorney. Primarily, this planning is done by transferring the litigation recovery to a first party Special Needs Trust (SNT). This type of trust allows a person with a disability to use the litigation recovery for his or her future needs while preserving eligibility for needs-based public benefits.

First-party SNTs are statutorily created “safe harbor” trusts. Therefore, every first-party SNT must strictly comply with a myriad of federal, state, administrative and judicial rules and regulations defining them. Even small changes in a plaintiff ’s fact pattern (e.g., plaintiff ’s age, legal capacity or amount of recovery) can lead to a very different planning solution. Thus, it is imperative for the practitioner to understand the law in this area and how different factual situations will change the appropriate plan. We can help navigate through these difficult waters to make sure that the plaintiff receives the best possible plan.

A first-party SNT is a trust authorized by federal law. The purpose of a SNT is to allow an individual with a disability to receive the benefit of their personal injury award while preserving their right to receive their essential “needs-based” public benefits. Primarily, the benefits at issue are Medi-Cal and Supplemental Security Income (SSI). Moreover, the SNT can provide expert money management by a professional money manager and provide appropriate care for the individual with a disability utilizing care managers, if appropriate.

Requirements for Special Needs Trust eligibility include:

The SNT must be funded with assets of the person
The person must be under 65 years of age at the time the SNT is funded
The person must be disabled
The SNT must be for the “sole benefit” of the person with a disability
The SNT must be established by a parent, grandparent, legal guardian, or a Court
Upon the death of the person with a disability, Medi-Cal must be repaid for benefits paid during the individual’s lifetime

Kevin Urbatsch regularly speaks nationally to accountant, attorney and business groups, and he has published many articles on special needs trust.

Settling a minor’s complaint adds a level of complexity to a lawsuit that can be daunting to even experienced practitioners. Those attorneys who resolve a minor’s lawsuit must comply with legal procedures designed to protect the minor. These procedures trigger court-imposed protections from settlement terms not in the minor’s best interest and protections against mismanagement of the minor’s settlement proceeds. The primary legal authority for resolving a minor’s lawsuit is found in Probate Code §§3500, 3600-3613. These statutes provide the framework on how to properly file the pleadings to compromise the minor’s claim.

Minor’s settlement trusts are an excellent tool for managing a minor’s settlement when public benefits are not an issue but assets are needed prior to the minor turning age 18. These trusts are useful in many cases to avoid rapid dissipation of the settlement when the minor turns age 18, when funds must be distributed to the young adult. We draft minor’s settlement trusts specifically tailored to meet a minor victim’s needs and goals.

Estate Planning

Every family can benefit from an estate plan. Why? Even a basic plan can prevent the state of California and the Internal Revenue Service from determining how your assets are distributed after you pass away, streamline the asset distribution process, and ensure your wishes are carried out. It can also give you control over your financial and healthcare decisions if you become incapacitated. Without a plan, someone you might not want to make decisions for you could petition the court for control over your finances and medical care. Avoiding this will benefit both you and your loved ones.

A properly designed and implemented estate plan can also help you accomplish a number of more ambitious goals, such as:

Protect your hard-earned assets

Allow you and your family can continue to enjoy the lifestyle to which you have become accustomed

Protect your heirs’ inheritances if they are not yet mature enough to make responsible decisions on their own

Provide for your impact on society and legacy

We help a wide range of individuals and families, people of modest means to those of high net worth, achieve their estate planning goals. We offer all of the following services and more:

Foundational Estate Planning

Revocable Living Trusts

Wills

Powers of Attorney

Advance Health Care Directives

HIPAA Authorizations

and Related Documents

Elder Law/Medi-Cal Planning

Elder law focuses on helping seniors prepare for and cope with the changes that come with growing older. It often involves helping seniors and their families find ways to pay for long-term care without losing most if not all of their assets. When you consider that the majority of seniors will find themselves in a nursing home at some point in their lives, Medicare will not pay for long-term nursing home care, and the cost of such care in California averages around $8,000 per month, it is not surprising that many middle-class families lose their life savings within one year of moving into a nursing home.

Kevin Urbatsch is an experienced Medi-Cal planning attorneys, he design plans to help seniors prepare for disability and the need for long-term care in advance, as well as cope with what is known as a “Medi-Cal Crisis.”

Advanced planning

Long-term care insurance is one way to protect assets against the high cost of long-term medical care, but it is expensive, often carries high co-pays, and is difficult to qualify for when there are pre-existing medical conditions. Fortunately, there are other options available to protect your assets in advance against the cost of long-term care. We can explain these options to you and create a plan to ensure you receive the care you need without losing the assets you have worked a lifetime to achieve.

Medi-Cal planning

Medi-Cal is a joint federal-state program that has become a significant provider of funds for long-term care in the state of California. Before applying for assistance from Medi-Cal, it is a good idea to speak with an elder law attorney. Many people make mistakes in filling out the application, or do things such as giving away assets in the hopes of becoming eligible for Medi-Cal. While gifting is possible, it has to be done correctly. There are strict rules governing Medi-Cal eligibility, and making mistakes in your application or management of assets can lead to severe punishments, such as long delays in obtaining benefits or outright denial of benefits.

A Medi-Cal crisis

We recognize that it is not always possible to plan in advance for incapacity. A Medi-Cal crisis is a situation in which an individual must enter a nursing home immediately, or in the very near future, and has been informed that he or she has too many assets to qualify for Medi-Cal assistance. If you or a loved one is facing a Medi-cal crisis, you need to understand that the information provided by family and friends, social workers or even nursing home intake staff is often outdated or otherwise inaccurate. At the Urbatsch Law Firm, P.C., we have a thorough understanding of Medi-Cal law and years of experience helping seniors obtain the Medi-Cal assistance they need. We may also be able to help even if you have been denied benefits in the past or are living in a nursing home already. Contact us as soon as possible to schedule an initial consultation.

Veteran’s Benefit Planning

While many people are unaware it exists, the Veterans Administration (VA) Aid & Attendance Special Pension provides monetary assistance to wartime veterans – and surviving spouses of deceased veterans – who need regular personal assistance. Qualifying aid or assistance can be provided at home, in an assisted living facility, or in a nursing home, and can be provided by friends, family members, or healthcare professionals.

If you or someone you love is a veteran and needs help with daily activities like cooking, cleaning, dressing, driving, mobility, or other assistance, the Aid & Attendance benefit can provide funds you need to pay for that help. Many elderly veterans and surviving spouses whose incomes are above the congressionally-mandated legal limit for a VA pension may still be eligible for monthly Aid & Attendance benefits if they have high expenses for care, including nursing home expenses, that are not reimbursed by insurance or other sources.

Aid & Attendance benefits can make a real difference but, filing a claim can be complex and time-consuming. Like most entitlements, veterans benefits are not awarded automatically – to receive them, you have to apply.

According to VA standards, veterans may be eligible for Aid & Attendance benefits if their medical needs fall in any of the following categories:

They require the aid of another person in order to perform personal functions required in everyday living, such as bathing, feeding, dressing, using the restroom, adjusting prosthetic devices, or protecting themselves from the hazards of their daily environment.

They are bedridden, and their disability or disabilities requires them to remain in bed apart from any prescribed course of convalescence or treatment.

They are a patient in a nursing home due to mental or physical incapacity.

They are blind, or so nearly blind as to have corrected visual acuity of 5/200 or less in both eyes, or concentric contraction of the visual field to 5 degrees or less.

Veterans who do not qualify for Aid & Attendance may still qualify for Housebound benefits when:

They have a single permanent disability evaluated as 100 percent disabling and, due to such disability, they are permanently and substantially confined to their immediate premises; or

They have a single permanent disability evaluated as 100 percent disabling and another disability or disabilities evaluated as 60 percent or more disabling.

Our office can help you gather the required documentation and complete the required paperwork. We can help coordinate the Aid & Assistance application, guide you through potential Medi-Cal issues, and create or modify your existing estate plan to ensure a veteran receives all the benefits he or she has earned by service to our country.